SEATTLE, Oct. 30, 2017 — Global supercomputer leader Cray Inc. (Nasdaq:CRAY) today announced financial results for its third quarter ended September 30, 2017.

All figures in this release are based on U.S. GAAP unless otherwise noted.  A reconciliation of GAAP to non-GAAP measures is included in the financial tables in this press release.

Revenue for the third quarter of 2017 was $79.7 million, compared to $77.5 million in the third quarter of 2016.  Net loss for the third quarter of 2017 was $10.2 million, or $0.25 per diluted share, compared to a net loss of $23.0 million, or $0.58 per diluted share in the third quarter of 2016.  Non-GAAP net loss was $13.3 million, or $0.33 per diluted share for the third quarter of 2017, compared to non-GAAP net loss of $19.5 million, or $0.49 per diluted share for the same period of 2016.

Overall gross profit margin on a GAAP and non-GAAP basis for the third quarter of 2017 was 36%. Overall gross profit margin on a GAAP and non-GAAP basis for the third quarter of 2016 was 30% and 31%, respectively.

Operating expenses for the third quarter of 2017 were $54.7 million, compared to $52.1 million for the third quarter of 2016.  Non-GAAP operating expenses for the third quarter of 2017 were $43.9 million, compared to $49.3 million for the third quarter of 2016.  GAAP operating expenses for the third quarter of 2017 included $7.7 million in restructuring charges associated with our recent workforce reduction.

As of September 30, 2017, cash, investments and restricted cash totaled $183 million.  Working capital at the end of the third quarter was $337 million, compared to $342 million at the end of the second quarter.

“The third quarter was highlighted by several exciting customer wins and strategic developments,” said Peter Ungaro, president and CEO of Cray.  “We completed our recently announced strategic transaction with Seagate to broaden our storage portfolio and deepen our presence in the storage market.  In supercomputing, our CS500 cluster was selected by KISTI, a leading research institution in South Korea.  And just last week we announced that we are partnering with Microsoft to deliver an integrated cloud services offering which will allow customers unique access to our high-performance supercomputers in the Microsoft Azure cloud — expanding our reach to new customers through the cloud and adding a complementary offering to our product set.  While a slow-down in our primary target market has continued, I remain positive about our recent activity levels, win rates, and development efforts and I’m excited about our long-term prospects to drive growth.”

Outlook

A wide range of results remains possible for 2017.  Several acceptances are planned for completion late in the fourth quarter, some of which will be challenging.  Assuming Cray is able to complete these acceptances before year-end, Cray expects revenue for 2017 to be in the range of $400 million.  GAAP and non-GAAP gross margins for the year are expected to be in the low- to mid-30% range.  Non-GAAP operating expenses for 2017 are expected to be in the range of $180 million.  For 2017, GAAP operating expenses are anticipated to be about $21 million higher than non-GAAP operating expenses, driven by share-based compensation, restructuring, and costs related to the Seagate transaction.

While a wide range of results remains possible and it is still early in the planning process, Cray expects 2018 annual revenue to grow in the range of 10% compared to Cray’s current 2017 outlook.  Revenue is expected to be about $75 million in the first quarter of 2018.

Actual results for any future periods are subject to large fluctuations given the nature of Cray’s business.

Recent Highlights

• In October, Cray announced that it is partnering with Microsoft to offer dedicated Cray supercomputing systems in the Microsoft Azure cloud, enabling customers to run AI, advanced analytics, and modeling and simulation workloads at unprecedented scale.
• In September, Cray announced it had completed the previously announced transaction and strategic partnership with Seagate centered around the addition of the ClusterStor high-performance storage business.
• In September, Cray announced that the Korea Institute of Science and Technology Information had awarded it with a contract valued at more than $48 million for a Cray CS500 cluster supercomputer.  The new system, which includes Intel Xeon Scalable processors and Intel Xeon Phi processors, will be the largest supercomputer in South Korea, providing support for universities, research institutes, and industries.
• In September, Cray announced that Yokohama City University in Japan installed a Cray XC50-AC supercomputer.  Located in the University’s Advanced Medical Research Center, the new Cray supercomputer will power various research including computational drug-discovery research used in the design of new medicines.
• In September, Cray announced that Japan Advanced Institute for Science and Technology put a Cray XC40 supercomputer into production to serve as the Institute’s primary supercomputing resource.
• In September, Cray announced that it signed a solutions provider agreement with Vanguard Infrastructures in order for Vanguard to develop, market, and sell on premise and cloud-as-a-service cybersecurity solutions that fuse supercomputing technologies with an open, enterprise-ready software framework for big data analytics.
• In August, Cray announced it delivered a Cray CS400 cluster supercomputer to Embry-Riddle Aeronautical University in Florida.  The system will power collaborative applied research with industry partners at the University’s new research facility.
• In October, Cray announced that Martin Homlish is stepping down from the Cray Board of Directors, effective October 31st, 2017, due to the growing demand for his time at his new company.

About Cray Inc.

Global supercomputing leader Cray Inc. (Nasdaq:CRAY) provides innovative systems and solutions enabling scientists and engineers in industry, academia and government to meet existing and future simulation and analytics challenges.  Leveraging more than 40 years of experience in developing and servicing the world’s most advanced supercomputers, Cray offers a comprehensive portfolio of supercomputers and big data storage and analytics solutions delivering unrivaled performance, efficiency and scalability.  Cray’s Adaptive Supercomputing vision is focused on delivering innovative next-generation products that integrate diverse processing technologies into a unified architecture, allowing customers to meet the market’s continued demand for realized performance. Go to www.cray.com for more information.

 

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Source: Cray